Informal Procedures for Personal Representatives

HMRC has quietly made a major change that will allow personal representatives to deal with the tax affairs of estates more simply in future. Normally when a person dies, the personal representatives of the deceased will need to settle any tax liabilities.

If the deceased was already registered for self assessment, this could mean filing at least two tax returns in the tax year of death: one for the period from 6 April up to the date of death and one for the period of administration. In practice HMRC will allow personal representatives to informally settle the tax liabilities for the period of administration where:

Total income tax and capital gains tax is no more than £10,000;

The estate was worth no more than £2,500,000 on death; and

The proceeds from the sale of assets are no more than £250,000 (up to 2015/16)

In a move that reflects the increasing house prices seen across the UK the limit to the proceeds from sales has been increased to £500,000 from 2016/17 onwards. This will be a welcome change to many personal representatives (and their agents). Filing complete tax returns can be a time consuming process and many estates will dispose of property in the course of administration.

This change is currently reflected on the GOV.UK website however when PD Tax Consultants contacted HMRC about this change they were unaware of the increase in this limit. HMRC have since contacted PD Tax to confirm that the new £500,000 limit for capital proceeds will apply from 2016/17 onwards.